Obama Administration Asks Banks to Regulate Their Own Foreclosure Abuses
Having bungled the so-called independent review of foreclosure mistakes, the Obama administration has now decided that the best way to help homeowners is to have the banks—which were responsible for the foreclosure errors—examine the case files and decide how best to fix the situation.
In January, the Office of the Comptroller of the Currency (OCC) shut down the foreclosure review by independent consultants—which had already cost about $2 billion— after it was revealed that the banks had selected said consultants. The process also proved to be taking too long to resolve homeowner grievances, so the administration decided to reach a $3.6 billion settlement with the banks.
But before the money can be distributed to individuals wronged during the foreclosure crisis, more than four million cases need to be reviewed. Instead of federal regulators doing the work, they are trusting the financial institutions, including Bank of America and Wells Fargo, to do it properly this time.
Housing advocates, not surprisingly, are worried the banks will shortchange homeowners while they scrutinize their earlier mistakes. “The whole process has been a slap in the face to homeowners and a slap on the wrist to banks,” Isaac Simon Hodes, an organizer with Massachusetts-based Lynn United for Change, told The New York Times. “The latest development shows how there has been no accountability.”
The OCC has promised to check the bank’s work to ensure things go right this time.
-Noel Brinkerhoff, David Wallechinsky
To Learn More:
Big Banks Are Told to Review Their Own Foreclosures (by Jessica Silver-Greenberg and Ben Protess, New York Times)
Government Accused of Allowing Bank of America to Investigate Itself about Foreclosures (by David Wallechinsky and Noel Brinkerhoff, AllGov)
Bank of America Smacked with Foreclosure Fraud Lawsuits (by Matt Bewig, AllGov)
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